A music business insider said: “It’s a bad day for UB40. They wouldn’t have got as much for their hits as you might think.

“It may not be enough to clear their debts.“

EMI are believed to be planning the release of a UB40 greatest hits album later this year.

It means that, although they still hold the publishing rights to the songs they have written, the band has effectively handed over control of what happens to their past hit records.

The deal to sell the recording rights was struck in the last two months. The amount the band received has not been disclosed, but it is thought the cash may not be enough to cover the debts.

If that were to be the case, it would mean that UB40 will not see a penny from their biggest hit singles and albums.

A senior EMI insider confirmed: “We have purchased complete rights of UB40’s recordings, but not the equivalent publishing rights.

“We had some rights previously under a licence, but this means we own the rights to release or sell the songs in future.

“The deal was signed this year for an undisclosed fee.“

The sale means that EMI can release albums featuring UB40 singing their hits without the permission of the band, and could even put out CDs in rivalry to future recordings by the group.

But former lead singer Ali Campbell, who quit the group after a row about financial management, claims he was told nothing about the sale of the UB40 hits on which he featured to EMI.

Ali and keyboard player Mickey Virtue stormed out in 2008, sparking a bitter war of words with brother Robin, who brought in kid brother Duncan Campbell to replace the singer. Virtue, 54, has never been part of the bankruptcy case.

Ali Campbell’s spokesman Chris Harrison said it was the first they had heard of the deal.

“If they resell the whole catalogue then the assumption would have to be that both Ali and Mickey would receive a share,“ he said.

“Neither one has currently been consulted on the sale and neither has received a percentage of any advances gained for any of the albums that have subsequently been released that both Ali and Mickey were part of creating.“

The cash raised from the rights sale will help reduce the money the band owes but a music industry source said it would probably not be enough to clear their debts.

“They would have got a decent amount for it but not as much as you might think,“ he said.

“We’re in the middle of a recession and there aren’t many big players left in the music business. “I doubt if it would be enough to sort out their debts.“

UB40’s defunct record company, DEP International, was liquidated in 2008, the same year that Ali and Mickey quit. DEP International still owned the band’s hits when the firm was wound up, so they were auctioned off by liquidators PKF.

The rights to the recordings were bought by Reflex Recordings, a business started in 2006 whose directors included Astro, James Brown, Brian Travers, Robin Campbell and a David Parker. Mr Parker is sole director of a separate firm called Reflex Recordings & Music Limited, a name which also appears on the band’s official website.

A PKF spokesman confirmed that they had sold off the band’s rights as part of the liquidation process.

“We sold the back catalogue back to a company which represents a number of band members,“ he said.

“As such we have no involvement with what happens to the back catalogue after the sale.

“It was sold to Reflex Recordings. What may have happened to the rights since then is not a matter we would deal with.“

At bankruptcy firm RSM Tenon, which is handling the current UB40 case, spokesman Mark Sands said it was common for penniless artists to do deals for their rights.

“The band has not got many assets but their back catalogue is one thing they did own,“ he explained.

“Sometimes bands hold on to them and the money is paid over as it comes in. Other times a group will simply sell them for a lump sum, which is what I assume they have done now.

“It is pretty common in this sort of industry for this to happen. Absolutely nothing – not a song, film, or anything – gets made without someone, somewhere owning the rights to it.“

Despite the leading members of the band being declared bankrupt, UB40 are understood to be recording a new album at a studio in Redditch, Worcestershire and plan tour dates this year.